7 - Debt and Monetary Authority

Summary

This chapter provides a case study analysis of the operation of public finance law concerning sovereign debt and monetary finance in the UK and Australia between 2005 and 2016. The legal and financial mechanics of sovereign borrowing and monetary finance are closely examined by reference to the authority of central banks and treasuries to finance the state beyond the point of fiscal deficit. The very broad powers delegated to treasuries over sovereign debt are scrutinised in the context of vastly different economic conditions, and their capacity to shrink the financial authority held by parliaments is observed. Special attention is then given to the monetary financing powers of central banks, particularly the Bank of England. The emergency monetary finance provided by the Bank of England during the financial crisis is surveyed, and the public financing aspect of 'unconventional' monetary policy, particularly quantitative easing, is examined. The chapter closes by observing the absence of meaningful legislative governance of debt and monetary finance in the context of financial or economic emergencies.